Metal industry: current situation of a key sector for economic development

The metal industry is a mainstay of the Spanish economy. This is not only due to its own specific weight, but also its direct impact on many other industries. In fact, according to the Metal Industry Map prepared by the Confemetal business association, it has an economic weight of up to 8% of Spain’s GDP.

Nevertheless, it cannot escape the external turbulence that is affecting economic growth. In this article we review the current state of the industry, the most relevant figures, and the obstacles that have detracted from its steady development.

The metal industry in figures

The generalized uncertainty in the world economy continues to influence trends on a global scale. The impressive weight of the metal industry in the Spanish economy is a clear indicator that allows us to check up on the health of Spanish industry.

Fall in metal production

According to data provided by Confemetal, production in this sector fell by 3.6% in March, after having grown by 2.6% in February. The armed conflict that broke out between Russia and Ukraine at the end of February is doubtless a key reason for this production slowdown, which is still ongoing at the time of this writing.

Business stagnation

The situation is repeated if we look at the Metal Industry Turnover Index, which decreased by 0.7% in March after being up 9.9% in February.

Over 1,000,000 people employed in the metalworking industry

The metal industry provided a total of 1,010,400 jobs in Spain during the first quarter of 2022. Despite a slight decrease with respect to the fourth quarter of 2021, this figure represents a 1.4% increase over the same period last year.

What events have affected the metal industry this year?

The year 2022, which is now reaching its halfway point, has brought with it a whirlwind of events that have inevitably altered the situation of the metal industry and all related industries. The following is an analysis of some of the most significant events to date:

  • War between Russia and Ukraine: A direct effect due to the upsurge in the price of metals like steel, which have soared 40–50%. Add to this an indirect effect from the production slowdown in sectors such as the automotive industry, stemming from a global shortage of parts and components among other factors.

  • Volatility in natural gas and electricity markets: Energy accounts for 35–40% of the manufacturing cost of some materials such as aluminum, illustrating the strong dependence of the industry on the energy market.

  • Industry collective bargaining  negotiations: The metal industry has made headlines in recent months with strikes in some regions of Spain over the negotiation of collective bargaining agreements, which are signed at the regional level.

Challenges for the next decade

The metal industry must face the future with determination, keeping in mind the main challenges that lie ahead for it:

  • Sustainability, energy transition and new forms of production to achieve climate neutrality objectives
  • Professional qualification and talent recruitment
  • Leveraging technology to optimize productivity
  • Forging strategic relationships with other partners in the production process

Basque Country, bedrock of the metal industry in Spain

The Basque Autonomous Community is one of the most important regions for the metal industry in Spain. According to the report “Panorama of Basque industry” prepared by EUSTAT last year, the metal industry represents 27.4% of the Gross Added Value of Basque industry as a whole, making it the top-ranking sector of the economy.

This drives home the importance of dedicating resources and effort to reactivate one of the industries that most decisively conditions the region’s growth and which puts the Basque Country in the spotlight to attract investment and strengthen its industrial leadership.

Companies such as ULMA Forged Solutions, the leader in forging and machining of flanges and forged components, constitute a very valuable cornerstone of the Basque economy and, consequently, of Spanish business generally. The objective now is to maintain a win-win relationship in which these companies are encouraged to increase their productivity and promote the country’s growth.